SOCIO-ECONOMIC OFFENCES
UNIT 3
CORRUPTION
Mr. Tarun Sharma
Assistant Professor
DME law school
[email protected] CORRUPTION
Merriam- Webster: dishonest or illegal behavior especially by powerful
people (such as government officials or police officers)
Cambridge Dictionary: illegal, bad, or dishonest behaviour, especially
by people in positions of power
Central Vigilance Commission: Corruption is perceived as a dishonest
or illegal behaviour, especially of people in position of power and
authority
Corruption refers to the abuse of power for personal gain, often
involving bribery, fraud, embezzlement, and other unethical behaviors. It
can take various forms and occurs in both the public and private sectors.
Below are some key practices and dimensions of corruption:
Bribery: Offering, giving, receiving, or soliciting something of value (money,
gifts, favors) to influence the actions of an official or other person in charge of a
public or private duty.
Embezzlement: The theft or misappropriation of funds entrusted to one’s care,
often occurring in public offices or corporate settings.
Fraud: Deception intended to result in financial or personal gain. This can
include manipulating financial records, providing false information, or using
fake credentials.
Extortion: Coercing someone to provide money, goods, or services by
threatening harm or using one's position of power to extract something of value.
Cronyism and Nepotism: Favoritism shown to friends or family members in
the allocation of jobs, contracts, or other privileges, regardless of merit or
qualifications.
Kickbacks: Illegal payments made in return for services or preferential
treatment. For example, contractors may provide a percentage of their
profits to officials who award them public contracts.
Money Laundering: Concealing the origins of illegally obtained money,
often by means of transfers involving foreign banks or legitimate
businesses.
Conflict of Interest: When an individual in a position of trust, such as a
public official or corporate executive, takes actions or makes decisions
that benefit their private interests over their public or professional
responsibilities.
Patronage Systems: Appointing supporters to positions of authority
based on loyalty rather than competence or qualifications.
DIMENSIONS OF CORRUPTION
Scale
Petty Corruption: Involves everyday abuse of power by low- and mid-
level officials in their interactions with ordinary citizens (e.g., police
officers, tax officials). Bribes may be requested for services like issuing
licenses, approving permits, or providing basic services.
Grand Corruption: Involves large-scale actions by high-level officials
that distort policies or central functioning of the state or corporation. This
type typically involves vast sums of money, affecting the integrity of
political or economic systems (e.g., rigged elections, high-level
embezzlement).
Sector
Public Sector Corruption: Occurs when public officials or employees
engage in corruption in government agencies, the judiciary, law
enforcement, or public utilities. This can include accepting bribes for
favorable legislation or licensing irregularities.
Private Sector Corruption: Involves corrupt practices within private
companies or industries, such as insider trading, corporate fraud, or
unethical lobbying.
Political Corruption: Manipulation of policies, institutions, and rules of
procedure in the allocation of resources and financing by political
leaders, often undermining democracy. This includes vote-buying,
influence peddling, and unethical campaign finance practices.
Forms
Institutional Corruption: Corruption embedded within and sanctioned
by the structure of an organization, where unethical behavior becomes a
normalized part of how the organization operates.
Systemic Corruption: Occurs when corruption is an integrated and
pervasive part of a society or system. It reflects a culture of corruption
that goes beyond isolated incidents, affecting every level of governance or
business operations.
Administrative Corruption: Involves unethical practices within the
implementation of public policies or administrative decisions, such as
manipulating procurement processes or hiring unqualified individuals.
Geographical Context
Domestic Corruption: Corruption that takes place within a specific
country, often regulated by national anti-corruption laws and institutions.
Transnational Corruption: Involves cross-border activities such as
money laundering, tax evasion, or bribery of foreign officials. Global
businesses and multinational corporations are often involved in
transnational corruption.
IMPACT OF CORRUPTION
Economic Impact: Corruption distorts market efficiency, increases the
cost of doing business, and hampers economic development by reducing
foreign investment and inhibiting fair competition.
Political Impact: It undermines the legitimacy of governments, erodes
public trust, weakens the rule of law, and fosters political instability.
Social Impact: Corruption exacerbates inequality, diminishes access to
public services (education, healthcare, etc.), and increases poverty by
diverting resources from where they are most needed.
Environmental Impact: Corruption can lead to poor enforcement of
environmental regulations, illegal logging, mining, and pollution,
negatively affecting ecosystems and contributing to climate change.
PREVENTIVE AND REGULATORY
MEASURES
Legislation: Enacting and enforcing anti-corruption laws and regulations
(e.g., whistleblower protection laws, anti-bribery statutes).Anti-
Corruption Agencies: Establishing independent bodies to investigate,
prosecute, and prevent corruption.
International Treaties: Global initiatives such as the United Nations
Convention Against Corruption (UNCAC) and regional anti-corruption
treaties that promote cooperation across borders.
Transparency and Accountability: Strengthening governance by
promoting transparency, open data, and accountability mechanisms (e.g.,
audits, independent oversight committees).
Public Awareness and Education: Raising awareness about the negative
effects of corruption and fostering a culture of ethics and integrity through
education and advocacy campaigns.
FAMOUS CORRUPTION CASE STUDIES
Watergate Scandal (United States)
Year: 1972-1974
Key Figures: President Richard Nixon and his administration
Overview: The Watergate Scandal involved the break-in at the
Democratic National Committee headquarters and subsequent cover-up
by President Nixon’s administration. It exposed widespread political
corruption, leading to Nixon’s resignation in 1974, the first and only U.S.
president to do so.
Impact: Triggered significant reforms in U.S. political campaign
financing and executive accountability.
The Petrobras Scandal (Operation Car Wash) (Brazil)
Year: 2014 onwards
Key Figures: Petrobras executives, Brazilian politicians, including
former presidents Luiz Inácio Lula da Silva and Dilma Rousseff
Overview: This corruption scheme involved Brazil’s state-controlled oil
company, Petrobras, where billions of dollars were siphoned off through
bribes, inflated contracts, and money laundering involving top Brazilian
politicians and business leaders.
Impact: Led to widespread political upheaval, numerous arrests, and
convictions, and is considered one of the largest corruption scandals in
Latin America.
The Fifa Corruption Scandal (Global)
Year: 2015
Key Figures: FIFA executives, including Sepp Blatter and Michel Platini
Overview: A major investigation by U.S. and Swiss authorities
uncovered widespread corruption in FIFA, the global governing body of
soccer. Officials were accused of accepting bribes and kickbacks related
to the bidding process for hosting World Cup tournaments and marketing
rights.
Impact: Several top officials were arrested and prosecuted, FIFA
President Sepp Blatter was banned from soccer, and reforms were
implemented within FIFA.
The Panama Papers (Global)
Year: 2016
Key Figures: Politicians, business leaders, celebrities worldwide
Overview: A massive leak of documents from the Panamanian law firm
Mossack Fonseca exposed how wealthy individuals and corporations
worldwide used offshore accounts and tax havens to evade taxes, launder
money, and hide wealth.
Impact: The leak led to investigations, resignations, and political
scandals in multiple countries, including Iceland and Pakistan. It also
spurred calls for global transparency in financial and tax regulations.
The Gupta Family Corruption Scandal (South Africa)
Year: 2010
Key Figures: The Gupta family, former President Jacob Zuma
Overview: The Gupta family, in collusion with then-president Jacob
Zuma, was accused of “state capture”—controlling key state-owned
enterprises and influencing political appointments for financial gain. This
involved massive corruption in sectors such as mining and media.
Impact: Zuma was forced to resign amid public outrage and multiple
investigations. The case highlighted the deep corruption affecting South
Africa’s governance.
Bofors Scandal (India)
Case Name: Win Chadha v. Central Bureau of Investigation 1992
Year: 1980s (uncovered in 1987)
Key Figures: Rajiv Gandhi (then Prime Minister) & Ottavio Quattrocchi
(Italian businessman)
Overview: The Bofors scandal involved allegations of kickbacks in a
$1.4 billion deal between the Indian government and Swedish arms
manufacturer Bofors AB for the supply of 400 Howitzer guns. It was
alleged that high-ranking officials, including then Prime Minister Rajiv
Gandhi, and others had received bribes to facilitate the deal.
Impact: The scandal eroded public trust in the government, led to Rajiv
Gandhi's defeat in the 1989 general election, and prompted judicial
investigations for decades. It became symbolic of government corruption
in India, highlighting the need for transparency in defense deals.
2G Spectrum Case (2008)
Case Name: Central Bureau of Investigation v. A. Raja and Others
Year: 2008 (uncovered in 2010)
Key Figures: A. Raja (then Minister of Telecommunications) &
Kanimozhi (Member of Parliament, DMK)
Overview: This case involved the illegal underpricing of 2G spectrum
licenses, leading to a loss of around ₹1.76 lakh crore ($28 billion) to the
exchequer, as reported by the Comptroller and Auditor General (CAG).
A. Raja was accused of favoring certain telecom companies by granting
licenses at below-market prices.
Impact: The scandal caused a major political crisis, leading to the
resignation of A. Raja and a Supreme Court investigation. In 2012, the
Supreme Court canceled all 122 licenses issued under the scheme. The
case became a symbol of large-scale corporate-political collusion, leading
to the weakening of the Congress-led UPA government.
Commonwealth Games (CWG) Scam (2010)
Case Name: Suresh Kalmadi v. Central Bureau of Investigation 2015
Year: 2010
Key Figures: Suresh Kalmadi (Chairman of the Commonwealth Games
Organising Committee)
Overview: The scam involved large-scale financial irregularities and
inflated contracts related to the hosting of the 2010 Commonwealth
Games in New Delhi. Suresh Kalmadi was accused of misusing ₹70,000
crore ($10 billion) allocated for the event, with funds siphoned off
through fake contracts, inflated bids, and illegal kickbacks.
Impact: The case caused national embarrassment, tarnished India's global
reputation, and led to the arrest of Suresh Kalmadi. It led to more robust
auditing mechanisms in sports governance and exposed corruption in
public infrastructure projects.
Fodder Scam (1990s)
Case Name: Lalu Prasad Yadav v. State of Bihar 2010
Year: 1996 (the scam spanned over decades)
Key Figures: Lalu Prasad Yadav (Former Chief Minister of Bihar) &
Jagannath Mishra (Former Chief Minister of Bihar)
Overview: The Fodder Scam involved the embezzlement of about ₹950
crore ($120 million) from the Bihar government’s treasury. Government
funds meant for the purchase of fodder and other supplies for livestock
were siphoned off through fake bills. Lalu Prasad Yadav was a key figure
implicated in the scam.
Impact: Lalu Prasad Yadav was convicted in multiple cases related to the
scam and was sentenced to prison. The case damaged his political career
and raised awareness about large-scale corruption in state-level
administration. It also spurred judicial and investigative reforms in cases
of political corruption.
Augusta Westland Chopper Scam (2013)
Case Name: Christian Michel v. Directorate of Enforcement
Year: 2013 (uncovered)
Key Figures: Former Air Chief Marshal S.P. Tyagi Middlemen and top
political figures
Overview: The scam involved alleged kickbacks in the procurement of
12 VVIP helicopters from Augusta Westland for ₹3,600 crore ($450
million). It was claimed that bribes were paid to Indian officials to modify
specifications to favor Augusta Westland.
Impact: The case led to arrests, including that of the former Air Chief
Marshal S.P. Tyagi. It strained diplomatic relations with Italy and led to
the cancellation of the chopper deal. It also highlighted issues in India's
defense procurement process.
